SUMMER INTERNSHIP PROJECT REPORT

ON

ANALYSIS OF CYPИ LTD.

Submitted in partial fulfillment of requirement of Bachelor of

Commerce (Hons.)

BCOM(H) VTH SEMESTER (M)

BATCH 2015-2018

Submitted to: Submitted by:

Reeta Nagari Samarth Suri
Assistant Professor 40514188815

JAGANNATH INTERNATIONAL MANAGEMENT

SCHOOL KALKAJI
 DECLARATION

I hereby declare that the present study of CYPИ LTD. Is based on my original
research work for the fulfillment of the continuous evaluation of the assessment of
two months summer internship program, BACHELOR OF COMMERCE-Class of
2015- 2018 .The report has been done by me under the guidance of Mr. Arjun
(Director), the research presented in this study has not been submitted in full or part in
this or any other university of the award of any degree or diploma.

Place: Bishkek (Kyrgyzstan)

 CONTENTS

Description Page No.

Acknowledgement 4
Contents with page no.
List of symbols, Abbreviations or Nomenclature
(optional)
Executive Summary
Certificate of Completion
Introduction to topic
Objectives
Literature review
Company Profile
Research Methodology
Analysis and Findings
Findings & Inferences
Limitations
Recommendations
Conclusion
Bibliography
References
 ACKNOWLEDGEMENT

A project report seems to be an individual effort is in fact teamwork.

Summer training at CYPИ was just like an opportunity to shake hand with the
practical world of business.

I am indebted to all those individuals who helped me in gaining

knowledge & insight into various aspects of export procedure and documentation.
The source of learning have been too many and a complete list of individual
references would become encyclopedic.

I want to express my deepest gratitude to Mr. Arjun, without whose

help this summer internship at CYPИ would not have been possible.

I am grateful to Mr. Arjun, for sharing his experience & knowledge

and without whose help the project would not have taken a shape.

My deepest appreciation also extends to Prof. Reeta Nagari (Project

Mentor), who critically reviewed my project report and provided suggestions.

Samarth Suri
 EXECUTIVE SUMMARY

This project is aimed at understanding the kyrgyzstan and indian market with
respect to textile market. The project begins with the introduction of the company i.e.
company profile. This part includes industry history, a study of Indian textile industry
and scope, industry SWOT, challenges faced and companies history, profile, market
performance, products and various production facilities.

Chapter 3 discuss about the Methodology of the collection of data.

Next discussed is the export documentation in detail such as Despatch Advise,

ARE-1 Form, Examination Reports, Annexure - A & C, Commercial Invoice etc.

After that we discuss the Export & Import procedure of Commercial &
Corporate Units of CYPИ Ltd. in detail.

In the end we discuss the export benefit schemes under which goods are
exported in detail.
 CERTIFICATE OF COMPLETION

This is to certify that Mr.Samarth Suri, Enrollment no. 40514188815 son of Mr.
Vikram Suri pursuing Bcom(H) form JAGANNATH INTERNATIONAL
MANAGEMENT SCHOOL,KALKAJI NEW DELHI
Has successfully completed project report in the organization on the topic Titled
ANALYSIS of CYPИ LTD.

During the project work we found him hardworking ,sincere and diligent person and his
behavior and conduct was during the project. We wish him all the best for his future
endeavors.

Facuilty in charge
Ms Reeta Nagari
Assistant Professor
TEXTILE & SPINNING INDUSTRY- GLOBAL PROSPECTIVE

The Textile & Spinning Industry - History

New innovations in clothing production , manufacture & design came

during Industrial Revolution - these new wheels, looms, & spinning processes
changed clothing manufacture forever.

The ‘rag trade’, as it is referred to in the UK & Australia is a

manufacture, trade & distribution of textiles. There were various stages - from the
historical perspective - where the textile industry evolved from being a domestic
small-scale industry, to a status of supremacy it currently holds. The ‘cottage stage’
was the first stage in its history where textiles were produced on a domestic basis.
During this period cloth was made from materials including wool, flax & cotton. The
material depended on the area where a cloth was being produced, & the time they
were being made.

In the later half of a medieval period in the northern parts of Europe,

cotton came to be regarded as an imported fiber. During the later phases of a 16th
century cotton was grown in the warmer climates of America & Asia. When the
Romans ruled , wool , leather & linen were materials used for making clothing in
Europe, while flax was the primary material used in the northern parts of Europe.

Spinning industry: How the spinning industry changed the fortune of the textile
industry from its early days till now!!!

During early 16th century, excess cloth was bought by merchants who
visited various areas to procure these left-over pieces. A variety of processes &
innovations were implemented for the purpose of making clothing during this time.
These processes were dependent on a material being used, but there were three steps
commonly employed in making clothing. These steps included preparing material
fibers for the purpose of spinning, knitting & weaving.

During the Industrial Revolution, new machines such as spinning

wheels & handlooms came into the picture. Making clothing material quickly became
an organized industry - as compared to the domesticated activity it had been
associated with before. A number of new innovations led to a industrialization of the
textile industry in Great Britain. Clothing manufactured during Industrial Revolution
formed the big part of the exports made by Great Britain. They accounted for almost
25% of the total exports made at that time, doubling in a period between 1701 &
1770.

In the Industrial Revolution era, the lot of effort

was made to increase speed of a production through inventions
such as the flying shuttle in 1733, the flyer-and-bobbin system,
and the Roller Spinning machine by John Wyatt and Lewis Paul
in 1738.

Shuttles

Lewis Paul later came up with a carding machine in 1748 & in 1764
the spinning jenny was also developed. The water frame was invented in 1771 by
Richard Arkwright. The power loom was invented in 1784 by
Edmund Cartwright.

The only surviving ex. of a Spinning Mule built by the inventor

Samuel Crompton

In the initial phases, textile mills were located in

& around a rivers since they were powered by water wheels.
After the steam engine was invented, a dependence on the rivers
ceased to great extent. In a later phases of the 20th century, shuttles that were used in
the textile industry were developed & became faster & thus more efficient. This led to
the replacement of the older shuttles with a new ones. Power looms were shuttle
operated but in early part of the 20TH century, the faster and the more efficient shuttle
less looms came into an existence. Today advances in technology have produced a
variety of looms designed to maximized production for specific types of material. The
most common of these are – Air jet looms & water jet looms. Industrial looms can
weave at speeds of six rows per second and faster.

Today, modern techniques, electronics and innovation have led to a

competitive , low-priced textile industry offering almost any type of cloth or design a
person could desire. With its low cost labor base, China has come to dominate a
global textile industry.

Textile and Spinning Industry in India in it’s early days…under British rule & post
freedom

India could be called the 'cradle of cotton' since it is the country in

which domestic cotton cultivation and manufacture into clothing really began. The
civilization of the Indus Valley dates back to 3000 BC & it is here, around the towns
of Harappa and Mohen-jo-Daro (now both in Pakistan), that remnants of homespun
cotton garments, bone needles & wooden spindles have been discovered dating back
to that time.

There is also evidence of early cotton trading abroad by India because

'fragments of cotton material originating from Gujarat have been found in Egyptian
tombs at Fostat, belonging to 5th century A.D' & cotton textiles were exported to
China during the Tang Dynasty (A.D. 618-906) via the silk route which ran between
China and Byzantium (Turkey, Greece, Macedonia, Albania etc).

India exported chintz (hand painted cotton fabrics) to Far Eastern &
European countries before the Europeans arrived in the sub-continent. As well as
chintz, & muslin (a fine thin cotton fabric), brightly coloUred brocade (a fabric either
made from silk or a blend of cotton and silk) was also popular & fashionable in India.
Brocade designs (or nakshas) were manufactured from cotton thread patterns made by
skilled craftsmen called nakshabanda.

In 1608 the East India Company set up a trading centre at Surat, the
main outlet for textile manufactures from Gujarat, a province on the northwest coast
of India; & in 1615 permission was granted by the Mughal emperor for the Company
to build a textile factory at Surat. Other trading centre were established at Calcutta,
Bombay & Madras (the 3 'presidency' towns).
Indian chintz & muslins (from Dacca or Bengal) soon became an important part of
East India Company trade. The cheap, pretty, brightly colored fabrics proved to be so
popular in England in the early 18th century that the British woolen & silk trades
were seriously affected. The brocades had attractive Persian inspired floral motifs or
patterns of blossoms until the 19th century when they began to reflect the English
wallpaper designs favored by the British Raj.

However, once the Lancashire cotton industry was established, India

was seen a large potential market for cotton fabrics. Indian textiles were popular &
inexpensive & had provoked complaints from British traders in 1788.

To put an end to Indian competition & to open up Indian markets to

British textile manufacturers, 'import duties on east Indian piece-goods ['fabrics made
& sold in standard lengths'] were increased thrice in 1797, 1798 and 1799, & nine
more times between 1802 and 1819, being reduced only in 1826 those imports [had]
reached their peak value in 1800 & their peak quantity in 1802 thereafter they
declined sharply' (Farnie.D.A. 1979). The muslin manufacturing industries of both
Lancashire and Scotland continued to grow and the bottom was effectively knocked
out of India's textile trading market.

Between 1814-1843 India was established as Britain's largest export

market that market peaking 1844-1886 and continuing to expand until 1913. By the
1790s India had been eclipsed by Lancashire for calico exports and by the USA in
1821 for raw cotton production.

In the 1820s India was importing more cotton goods than she exported;
muslin from Lancashire and Scotland & calico from Lancashire. A majority of Indian
imports were 'grey goods' (white/plain unbleached calicoes) because, except for
Turkey Red, 'Britain could not compete with the dyeing & printing industry of the
East. Calico exports first exceeded those of muslins in 1818.

Although almost the whole population wore cotton clothing, the Indian
market was affected by consumer poverty, the persistence of the Indian cottage
industry in cotton production/ manufacture, & the ability of Indian handloom weavers
to produce the finer fabrics preferred by Indian women.
 Despite protests from Lancashire weavers India began to import cheap
mill spun yarn from England in 1817. During the 1860s the Bombay cotton spinning
mills slowly began to reduce English yarn imports. However the Indian cotton market
continued to expand as India became a distribution centre for Lancashire yarn &
calico to markets which lay around the shores of the Indian Ocean.

India increased imports of Lancashire piece-goods twice as quickly as

anyone else between 1820-1886 & half as fast again between 1887-1919. Any
decrease in Indian market demand inevitably affected the English cotton trade
situation & proved the contributing factor to a number of depressions in the 19th
century English cotton industry.

In India the cotton economy was closely linked to the agricultural

economy & was therefore subject to fluctuations caused by poor harvests or the length
of the monsoons. India exported raw cotton to England but it was of the short stapled
variety, unlike a medium stapled variety produced by USA; & import duties favored a
higher quality long stapled West Indian cottons between 1798-1828.

Import duties remained a means of increasing British competitiveness

and decreasing Indian competitiveness when occasion demanded. India always
essentially seen as an export market for calico rather than as an import market for
cotton.

INDIAN TEXTILE & SPINNING INDUSTRY- Present situation &

an insight into the future

The Indian textile industry contributes about 14% to industrial

production of a country, 4% to the country's gross domestic product (GDP) & 17% to
the country’s export earnings, according to the Annual Report 2009-10 of the
Ministry of Textiles.

It provides direct employment to over 35 million people & is the

second largest provider of employment after agriculture. The cumulative production
of cloth during April , 2009 – March 2010 increased by 8.3% as compared to
corresponding period of the previous year.
 The Indian textile industry witnessed growing investments during a
last half a decade. It is estimated that a textile industry received fresh investment of
Rs. 50,000 crores during 2004 & 2006. The fresh investment will enable the industry
to expand capacities and achieve economies of scale. With new investment flow ,
India’s cotton production increased by 57% over a last 5 years and 3 million
additional spindles and 30000 shuttles less looms was installed.

Our economy is largely dependent on textile manufacturing & trade in

addition to other major industries. Around 8% of the total excise revenue collection is
that contributed by a textile industry.

The textile industry in India has the strong multi-fibre raw material
production base. The technology SAVVY industry to meet the challenges ahead.
“India exported textile worth US$ 18.6 billion during April 2009 –January , 2010,
from US$ 17.7 billion during the corresponding period of the previous year,
registering increase of 4.95% in Rupee terms. Further, the share of textile exports in
total exports has increased to 12.36% during April, 2009 - January 2010 , according to
the Ministry of Textiles. As per Index of Industrial Production (IIP) data woolen
textiles has registered growth of 8.2% during April, 2009 -March, 2010 while textile
products including wearing apparel have registered the growth of 8.5%.

India Spinning Industry has gone from strength to strength since the
very long time as it was a hub of cotton manufacturing in early days. Cotton is not
only consumed to the highest extent in India but it has also become one of the most
profitable textiles in export industry.

Spinning in India can be classified into 2 categories: Medium & Long

staple. But there was a shortfall in the 'extra-long' category that continued for many
years. The yarn spinning industry covers almost 25 percent of the total industrial
production of one of a world's 10 largest economies. Trends are reviewed every year
in accordance with the need & fashion.

The Spinning Industry in India is on set to hit a global market with

other fabrics as well like a cotton textiles with its enthusiasm and consistency in work.
It has already reached a phenomenal status in India by beating a obstacles that caused
a downfall since past few years and is now on its way to cover a wider area in
spinning sector.

First time the separate policy statement was made in 1985 in regard to development of
textile sector.

 The Indian Textile Industry is the second largest in the world.

 It has the largest cotton acreage (9 million hectares).
 It is the third largest cotton producer.
 It ranks 4TH in terms of staple fibre production & 6TH in filament
yarn production.
 India accounts for (circa) 25% of the Global trade in cotton yarn.
 It is the largest producer of Jute, the second largest producer of
silk and the 5th largest producer of synthetic fibre / yarn.
OBJECTIVES OF THE PROJECT

 Enhancing knowledge base Import-Export Procedure in general.

 Learning about various formalities and documents required in this

Import-Export process.

 Studying the Textile Industry specific EXIM policies and laws.

 Learning about the documentation required in the import and export

procedure and understanding the need for these forms and documents.

 Understanding the efforts made by govt. to promote exports from the

country by studying various export promotion schemes introduced.

 To study the Export Documentation in CYPИ Limited

(i) Pre-Shipment Procedure

(ii) Post-Shipment Procedure

 SWOT ANALYSIS OF INDIAN TEXTILE INDUSTRY

STRENGTHS:
 Indian Textile Industry is an Independent and Self-Reliant industry.

 Abundant Raw Material availability that helps industry to control costs &
reduces the lead-time across the operation.

 Availability of Low Cost & Skilled Manpower provides competitive

advantage to industry.

 Availability of large varieties of cotton fibre and has a fast growing synthetic
fibre industry.

 India has great advantage in Spinning Sector and has a presence in all process
of operation and value chain.

 India is one of the largest exporters of Yarn in international market and

contributes around 25% share of the global trade in Cotton Yarn.

 The Apparel Industry is one of the largest foreign revenue contributor and
holds 12% of the country’s total export.

 Industry has large & diversified segments that provide wide variety of
products.

 Growing Economy & Potential Domestic & International Market.

 Industry has Manufacturing Flexibility that helps to increase the productivity

WEAKNESSES:
 Indian Textile Industry is highly Fragmented Industry.

 Industry is highly dependent on Cotton.

 Lower Productivity in various segments.

 There is Declining in Mill Segment.

 Lack of Technological Development that affect the productivity & other

activities in whole value chain.

 Infrastructural Bottlenecks & Efficiency such as, Transaction Time at Ports

and transportation Time.
 Lack of Trade Membership, which restrict to tap other potential market.

 Lacking to generate Economies of Scale.

 Higher Indirect Taxes, Power and Interest Rates.

OPPORTUNITIES:
 Growth rate of Domestic Textile Industry is 6-8% per annum.

 Large, Potential Domestic and International Market.

 Product development & Diversification to cater global needs.

 Elimination of Quota Restriction leads to greater Market Development.

 Market is gradually shifting towards Branded Readymade Garment.

 Increased Disposable Income and Purchasing Power of Indian Customer.

 Emerging Retail Industry & Malls provide huge opportunities for the Apparel,
Handicraft & other segments of the industry.

 Greater Investment and FDI opportunities are available.

THREATS:
 Competition from other developing countries, especially China.

 Continuous Quality Improvement is need of an hour as there are different

demand patterns all over the world.

 Elimination of Quota system will lead to fluctuations in Export Demand.

 Threat for Traditional Market for Power loom and Handloom Products and
forcing them for product diversification.

 Geographical Disadvantages.

 International labour and Environmental Laws.

 To balance the demand and supply.

 To make balance between price and quality.

 COMPETITOR STRENGTHS AND WEAKNESSES

Country Strengths Weaknesses

China World’s largest Textile Economy. Large obsolete production
The largest exporter of textiles & capacities in the cotton
clothing. sector.
This accounts for 17% of world trade Low value addition.
(Textiles = 13%; Clothing = 20%).
World’s largest producer of Cotton.
World’s largest producer of
Synthetic fibres.
Textile sector generates 10% of its
GDP; & 20% of its merchandise
output.
Relatively low labor costs.
Bangladesh One of the world’s largest exporters Raw material base; no
of readymade garments (exports of indigenous cotton
US $ 5 billion pa). production; and relies
heavily on imported yarns &
Significant presence in US markets, fibres.
due to a large quota. Inadequate infrastructure.
Also enjoys quota free, and duty free
access to Australia; Canada and Leads to congestion and
Norway. delays at ports.
Its status as a least developed country Inadequate communications
(LDC) will give it favorable market network.
access in the post quota era
(01/01/2005); with preferred facility
for EU markets. Uncompetitive and
Has mastered the garment trade & unreliable power supply
has low cost / high productivity in leads to production delays &
that sector. elevated costs.
Sri Lanka Textile and Apparel Industry has Small domestic fabric base.
 crucial part of country’s economy.

It is the country’s biggest employer Relies heavily on yarn and

in manufacturing; and number 1 fabric imports.
export earner.
Industry is seeing decline in
In 2001 it accounted for 69% of the competitiveness due to its
country’s industrial exports and 53% heavy reliance on quota
of its total exports. categories, concentration on
a few markets, inability to
develop new markets or
major purchasers because of
direct marketing contacts.

Relatively small domestic

Relatively secure markets in with market, little cash generation
USA; EU & Canada through bilateral to support investment in
agreements. developing export markets.
Pakistan Fourth largest Cotton producer in the Limited manufacturing base
world. in clothing & processing.
Limited research &
Highly developed garment development restricting
confection industry, and also dyeing diversity in product and
& finishing industry. innovation.

Abundant labor force, which

relatively cheaper than China and
India.
CHALLENGES

1. Product : Products are inadequate to suit the demands of both the

international and domestic markets. The bulk of products
are medium and low quality between Chinese made &
those made in the developed countries.

2. Inefficient : Inefficient operation in the textile enterprises due to

Operation historical reasons, which led to high cost production, an
excessive work force and poor management skills, slow
reaction on the customer’s requests and old business
operation made.

3. Processing : The low level processing technology- there is excessive

Technology of production capacities for lower end products and lack
of creativity in product design.

4. Awareness : Improve the awareness of the fashion in the textile

industry and keep up with the pace of the world.

5. Response : Sharpen quick response awareness.

 LITERATURE REVIEW

An extensive literature survey is done to gather.

 Information related to the brand through brochures, visiting the manufacturing

unit at Naurangpur.

 Information on brand position

 Information regarding various tools to be used to measure attitudes & analyse

the collected data.

Information about our competitor

 COMPANY’S PROFILE

CYPИ is one of the largest textile conglomerates in Bishkek and the

group has a turnover of $100 mn. Spanning over 24 manufacturing facilities in three
states across Bishkek, the Group business portfolio includes Yarn, Geiger and
Processed Fabric, wool, Acrylic Fibre And T shirts.

CYPИ Group manufacturing facilities include over 800 spindles, 25

tons per month yarn and fibre dyeing, 90 shuttle less looms, 90 meters per day
processed fabric, 3 tons per month wool, 18 metric tons per month acrylic fibre and
10 tons per month T shirt.

HISTORY OF THE GROUP

CYPИ has evolved through history from a small beginning in 1994

into a modern textile major under the dynamic leadership of its chairman, Devender
Singh. His vision and insight has given CYPИ an enviable position in the textile
industry. Under his leadership, CYPИ is efficiently using resources to innovate,
diversify, integrate and build its diverse operations into a dynamic modern enterprise.

The industrial city of Tirpur, also known as the Manchester of India

nestles the corporate Mills of CYPИ group. Within the precincts of this city is located
the Corporate mills of the CYPИ Group, a household name in Northern India. The
CYPИ Group, born in 1998, under the entrepreneurship of Devender Singh has today
blossomed into one of the largest Textile Business houses in Kyrgyzstan.

In 2005 The company also has a strong presence in the markets of

Russia, Kyrgyzstan ,UK and EU in addition to the domestic market. Adherence to
systems and a true dedication to quality has resulted in obtaining the coveted ISO
9002/ ISO 14002 quality award which is the first in Textile industry in India and yet
another laurel to its credit.
Where the company stands today……

800 spindles 90 shuttle Looms 3 tons per month wool

65 tons per month 90 meter per day fabric 18 metric ton per month
dyeing capacity processing facilities production capacity for
acrylic fiber and tow
 GROWTH OF THE COMPANY

Company also has a strong presence in various countries like

Kyrgyzstan Russia and EU in addition to domestic market. Yet another forward

integration project on readymade garments is in the offing and is to be realized soon.

CYPИ group is earning laurels by exporting yarn and fabrics to international quality

to several countries in Kyrgyzstan and Russia earning valuable foreign currency for

country. CYPИ group is company among textile industry to receive the 9002/ISO

14002 quality awards in India.

 MISSION
 CYPИ aims to be world class textile organization producing diverse range of
products for global textile market. CYPИ seeks to achieve customer delight
through excellence in manufacturing & customer service based on creative
combination of state-of-the-art technology & human resources. CYPИ is
committed to be responsible corporate citizen.

VISION
 "To be globally recognized as a Leading Supplier of Quality Fabrics"

COMPANY’S PHILOSOPHY

 Faith in bright future of Indian textiles and hence continued expansion in areas
“which we know the best”
 Total customer focus in all operational areas.
 Product to be of best available quality for premium market segments through
TQM & zero defect implementation
 Global orientation targeting – at least 20% production for exports.
 Integrated diversification / product range expansion.
 World class manufacturing facilities with most modern R&D and process
technology.
 Faith in individual potential & respect for human values.
 Encouraging innovation for constant improvements to achieve excellence in
all functional areas.
 Accepting change as a way of life.
 Appreciating our role as a responsible corporate citizen.
 Include TPM Concept.
 MARKET PERFORMANCE

During the last 5 years, CYPИ Group has recorded 10 percent top line
growth rate, which is higher than the industry average growth rate.

500
400
300
200
100
0

95 996 997 998 999 000 001 002 003 004 005 006 007 008
19 1 1 1 1 2 2 2 2 2 2 2 2 2

 Largest Spinning capacity in Kyrgyzstan – over more than 8 lacs

spindles.

 Largest producer of Cotton, Synthetics and Blended yarns in the

country

 Largest Dyeing Capacity of Fibre & Yarn

 Largest range of Textile products

 Third largest producer of wool in the Kyrgyzstan

 Collaborations with specialist worldwide

 ERP enabled solutions for online order tracking

 TYPES OF PRODUCT PRODUCED

YARNS

Yarn is the largest strategic business unit of CYPИ Group with 800
spindles and 25 tons per month yarn and fiber dying capacity. The Group offers one-
stop solution for variety of yarn requirements of a leading customers in Kyrgyzstan &
the international markets. CYPИ offers the widest range of specialized greige and
dyed yarns (NE 10 to NE 200) in cotton, polyester, acrylic and varieties of blends.
The group offers value added products like Organic Cotton, Melange, Lycra, Ultra
yarns (contamination controlled), gassed mercerized, super fine yarns and fancy yarns
for hand knitting. CYPИ is India's largest exporter of cotton yarn to the most quality
conscious markets like EU, USA and Far Eastern countries.

FABRICS

CYPИ is among the few fully integrated fabric suppliers in the

country. An exquisite range of fabrics for shirting and trousers enables CYPИ to offer
fashion solutions to the leading clothing manufactures in the world. The state-of-the-
art manufacturing facilities having 90 shuttleless looms and producing 90 meters per
day processed fabric are located in North and Central India, which cater to the highly
customized fabric needs of the buyers. An integrated fabric supply chain extending
from raw materials to yarns and from weaving to processing provides the winning
edge to the customers.

FIBER

The acrylic fiber of CYPИ is acclaimed for a wide variety of textile

applications. The modern manufacturing plant based on renowned Japan Wet Spun
technology produces 18 Metric tons per annum acrylic fiber at Kyrgyzstan.
 METHODOLOGY OF STUDY

The project has been a joint effort of both primary level & secondary
level research and discusses all the topics touched at various stages of the study in
details. The methodology of research followed is stated in brief as under:

The project achieved it’s current meaningful shape because of a efforts

of many people who shared their experiences & provided guidance at different levels
of the project preparation. To make the project a more reliable thesis when referring
to export- import procedure and practices, a mix of both primary research and
secondary research has been used. The information obtained from primary sources has
been cross verified by use of secondary sources and vice-versa.

The project has been prepared by employing a well defined strategy

and plan developed at the beginning of the Summer Internship. The project at it’s
earliest stage of origin was divided into various parts and step by step achievement of
short term objectives set resulted into it’s successful completion.

Primary research: the primary research is first hand data and facts
one has access to during a research and is considered a more reliable one. The visit to
the various department related to export & import at CYPИ during the project
preparation resulted into first hand information being obtained from the people who
really behind the processing of exports and imports at CYPИ. Guidance and
mentorship provided at various levels helped in understanding the practicalities
related to the process and step by step systematic procedure followed to smoothen the
process. Ample time provided with various departments and continuous guidance
helped in clarification of all possible doubts leaving no question unanswered related
to the study.

Secondary research: this sort of research study is dependent on fact

and data collected & organized by someone else but one is free to analyze it according
to his own research objectives. The problem with this type of study is that reliability
of this data is questionable and solely dependent on the trust from the source it comes.
The internet in the past one decade has become the biggest and most easily accessible
source for any sort of information requirement was intensively used and referred
during the project preparation. The reliability of the source from where the
information came was seriously accessed and an effort has been made to avoid any
possible data coming from a doubtful or not trust worthy source.

For further insight into the project some books, journals and companies
published material has also been referred. The company mentors also shared material
to enhance my understanding keeping in view the companies privacy policy.

Both the mediums primary and secondary research have been

alternatively used as and when required keeping in view the objectives of the project
and cross verification of data so obtained has also been done in the most efficient
manner to drop anything which came out to fall in the parameters of doubts.

1. Records: For the comprehensive data collection various records related to the
subject of study were used.
2. Books: Some useful books were also used in the study for the purpose of having a
perfect blend of relevant theoretical and practical aspects.
3. Websites: Websites related to the subject of the study were also referred for the
further data collection.
 Research Design

Collection of Data

Universe and Survay

Population

Sample

Analysis Pattern
Research Design

“A research design is the arrangement of condition for collection and analysis of data
in manner that aims to combine relevance to the research purpose with economy in
procedure.” In fact, the research design is the conceptual structure within which
research is conducted . It constitutes the blueprint for the collection, measurement and
analysis of the data. Universe & survey population, sampling, analysis pattern all are
the different parts of this structure.

The present study is Descriptive as well as Exploratory study because the project is
based on the information collected from the study of dealer’s perception for the
products of the firm, which is further utilized for the analysis of the data. Then the
comprehensive analysis is done and efforts are being made to explore the new insights
into the problem, so that suggestions for the further improvement of the system can be
suggested.

Data Collection:

Data collection is the most critical part of any Research Project. This is the process of
identifying the suitable and relevant sources of data and than collecting the data from
various selected sources, so that the collected data can be utilized for the further
progress of the study, because collected data is analyzed and interpreted in order to
find out the valuable findings.

In the present study both type of data- Primary as well as secondary are used. But a
massive part of the data was collected through primary data. The main sources from
which the data was selected can be outlined as follows:
Primary sources:
1 Observation: By observation method data is collected. While working
on the project related to Market Analysis were observed and this data was then
further utilized for the analysis and interpretation.

2 Questionnaire: Questionnaires were used to measure the system

effectiveness by getting them filled by the dealers of the products manufactured by
the organization. The questionnaire constituted …… questions. Dealers were asked to
fill up the questionnaires as per their experiences about products of company.

Secondary Data Sources:

1. Records: For the comprehensive data collection various records related to the
subject of study were used.
2. Books: Some useful books were also used in the study for the purpose of having a
perfect blend of relevant theoretical and practical aspects.
3. Websites: Websites related to the subject of the study were also referred for the
further data collection.
FINDING AND CONCLUSION

CYPИ
 EXPORT DOCUMENTATION

An exporter without any commercial contract is completely exposed of

foreign exchange risk, damage of goods during transit, non-payment or frauds by any
of the parties to a transaction, legal actions & proceeding etc. Export documents apart
from being a tool for proper taxation also serve many other purposes. It’s an
agreement between the consignor & consignee agreeing upon certain set of mutual
decided conditions. It helps in fastening up a export procedure by means of
documenting various sort of information required by various examining authorities.
Export documents are required for getting the goods insured, calculation & payment
of taxes, internal stock record keeping & auditing of export firm and also serve the
purpose of being a proof for tax paid & goods delivered by exporter. On the hand
helps the clearing authorities on both sides by providing detailed view of the
consignment and acts as a document of cross verification for the importer checking
upon the consignment received & goods actually ordered by him/her.

So documentation is beneficial as well as crucial affair from the point

of view of the exporter, custom authorities, banks/financial institutions, insurance
companies, importer and other parties involved in the export procedure.

The export process is made more complex by the wide variety of

documents that the exporter needs to complete to ensure that the order reaches its
destination quickly, safely and without problems. Most exporters rely on an
international freight forwarder to handle the export documentation because of the
multitude of documentary requirements involved in physically exporting.

The benefits of documentation

Documentation is a key means of conveying information from one

person or company to another, & also serves as permanent proof of tasks and actions
undertaken throughout the export process. Documentation is not only required for
your own business purposes & that of your business partner, but also to satisfy the
customs authorities in both countries & to facilitate the transportation of & payment
for goods sold.
 One value of documentation is that copies can be made & shared with
the parties involved in a export process. If the documentation is complete, accurate,
agreed upon by the parties involved & signed by each of these parties (or their
representatives), the document will represent a legally binding document.

Function of export documentation: Export documentation may serve any or all of

the following functions:

 An attestation of facts, such as a certificate of origin.

 Evidence of the terms and conditions of a contract if carriage, such as

in the case of an airway bill.

 Evidence of ownership or title to goods.

 A promissory note; that is, a promise to pay.

 A demand for payment, as with a bill of exchange.

 A declaration of liability, such as with a customs bill of entry.

 A receipt for goods received.

 BROAD CATEGORIES OF EXPORT
DOCUMENTATION

1. Documents involving the importer:

 The Performa invoice
 The export contract
 The commercial invoice
 The packing list
 Letter of credit
 Certificate of origin
 Certificates of health
 Pre-shipment inspection certificate
 Transport documents

2. Documents required to export goods:

 Letter of credit
 Commercial invoice
 Bill of entry export
 Examination Report form
 Label for Sample Packing
 Annexure-A
 Annexure-C
 Export permite

Certain documentation take place while exporting from India. Special

documents may be required depending on the type of product or destination. Certain
export products may require a quality control inspection certificate from the Export
Inspection Agency. Some food and pharmaceutical product may require a health or
sanitary certificate for export.

Shipping Bill/ Bill of Export is the main document required by the

Customs Authority for allowing shipment. Usually the Shipping Bill is of four types
and the major distinction lies with regard to the goods being subject to certain
conditions which are mentioned below:

 Export duty/ cess

 Free of duty/ cess

 Entitlement of duty drawback

 Entitlement of credit of duty under DEPB Scheme

 Re-export of imported goods

The following are the documents required for the processing of the
Shipping Bill:

 GR forms (in duplicate) for shipment to all the countries.

 4 copies of the packing list mentioning the contents, quantity, gross

and net weight of each package.

 4 copies of invoices which contains all relevant particulars like number

of packages, quantity, unit rate, total f.o.b./ c.i.f. value, correct & full
description of goods etc.

 Contract, L/C, Purchase Order of the overseas buyer.

 AR4 (both original and duplicate) and invoice.

 Inspection/ Examination Certificate.

Some of the Important documents related to Export:

 Commercial invoice - Issued by the seller for the full realisable

amount of goods as per trade term.

 Customs Invoice - Mainly needed for the countries like USA, Canada,
etc. It is prepared on a special form being presented by the Customs
authorities of the importing country. It facilitates entry of goods in the
importing country at preferential tariff rate.
 Legalised/ Visaed Invoice - This shows the seller's genuineness before
the appropriate consulate/ chamber of commerce/ embassy. It do not
have any prescribed form.

 Certified Invoice - It is required when the exporter needs to certify on

the invoice that the goods are of a particular origin or manufactured/
packed at a particular place and in accordance with specific contract.
Sight Draft and Usance Draft are available for this. Sight Draft is
required when the exporter expects immediate payment and Usance
Draft is required for credit delivery.

 Packing List - It shows the details of goods contained in each parcel/

shipment

 Certificate of Shipment - It signifies that a certain lot of goods have

been shipped.

 Certificate of Conditioning - It is issued by the competent office to

certify compliance of humidity factor, dry weight, etc..
 The following the parties and agencies involved in executing an
export order:
1. Exporter
2. Importer.
3. The negotiating bank
4. Shipping company
5. Insurance company
6. Reserve Bank of India
7. ECGC
8. Directorate General of Foreign Trade
9. Customs House
10. Port Trust
11. Inspection Agency
12. Clearing Agents

Procedure for executing an export order:

The exporter has to process the export order in the following manner:
1. The exporter should scrutinize the export order with reference to the
terms and conditions of the contract. The order should specify the
mode of payment such as letter of credit, document against acceptance
or document against payment, and the terms of conditions as specified
in the letter of credit. The following documents have to be prepared.
 Bill of Exchange (if D/A or D/P bill)
 Commercial invoice
 Bill of lading
 Marine insurance
 Packing list
 Certificate of orgin
 Export inspection certificate.
2. A delivery note (in duplicate) is to sent to the works manager or
factory manager giving the description of goods to be exported along
with the copy of the instruction given by the importer.
3. As soon as the goods are manufactured and kept ready for shipment the
following have to be done:
  Clearance of the excise authority has to be obtained.
 Export inspection agency should be approached.
 Goods should be despatched to the port of shipment.
 AR-4 form has to be prepared.
4. Thereafter the works manager sends a despatch advice to the export
department. They will obtain the marine insurance cover for the goods.
Then the exports department sends the following documents to its
clearing and forwarding agents along with detailed instructions:
 Commercial invoice
 Original export order
 Original L/C
 Packing list
 Certificate of inspection
 Endorsement regarding floor price.
5. The clearing & forwarding agent takes delivery of the consignment &
arranges its storage in the warehouse. Thereafter he prepares requisite
copies of shipping bill and submits them to the Export Department of
the Customs house along with necessary documents mentioned above.
6. After the shipping bill has been passed by the customs, the clearing and
forwarding agents presents the Port Trust copy of the shipping bill to
the respective authorities. Thereafter, in the case of shed cargo, the
Dock challan is prepared. Where the ship loads overside, the dock
charges are indicated in the shipping bill itself and therefore, no dock
challan is prepared.
7. The passed Shipping Bill including dock challan will be submitted to
the Port Commissioners.
8. In response to that the Ship's Export Clerk calls for cargo from shed or
boat and after loading prepares the Mate Receipt. A mate receipt is a
receipt issued by the commanding office of the ship when the cargo is
loaded on the ship and contains information about the name of the
vessel, berth, date of shipment, description of packages, marks and
numbers, condition of the cargo at the time of receipt on board the ship
etc. The mate receipt is first handed over to the Port Trust authorities
so that the exporter may pay all the port dues. After paying all the port
 dues, the clearing agent collect the mate receipt from the Port Trust
Authorities.
9. The clearing and forwarding agent forwards the following documents
to the exporter: Full set of bill of lading, export promotion copy of the
bill, copies of customs invoice, original export order.
10. As soon as the exporter receives the above documents from the
clearing and forwarding agent, he completes the remaining formalities.
He will present the following documents to the negotiating bank.
GR Form, Customs invoice, Certificate of origin, Packing list, Marine
insurance policy and Bank certificate.
EXPORT PROCEDURE

CYPИ
 EXPORT PROCEDURE AT CYPИ

The export procedure of every organization varies from industry to

industry and choice of practices followed by the organization. CYPИ as an exporter
has it’s distinct identity as a quality exporter in the international market and stands
ahead from it’s competitors by practicing it’s own internal set of rule book to handle
an export assignment. The two departments primarily involved in the export order
processing are as follows:

 Corporate unit

 Commercial unit

Both the departments play a uniquely important role in processing an

export order or receipt of import. The procedure followed by both the departments has
been discussed in detail as follows and a description of the important documents
required in export procedure follows the discussion.

Firstly let’s start by discussing the role of Corporate Unit in export

procedure and latterly the role played by the Commercial Unit.

Enquiry
 Checking Feasibility of order

Pricing & confirmation of delivery

Acceptance & Formal contract with

customer

Sampling quality approval & Production

planning

Getting Letter of credits & Payment Scanning of L/C

Contract Registration

Pre shipment activities

Payment of shipping
expenses & agency charges
Shipment of Goods

Generation of Post Shipment Documents

Commission Payment to Agents

Feed Back & Complaint handling

Export Procedure of the Corporate Unit

1) Enquiry: - The first stage is of enquiring with the agents about export orders
available with them, these enquiries can be done with the agents through
telephones and mails.

2) Checking feasibility of the order put forward by the agents- Checking

whether the order if taken would be profitable or not and also comparing it
with other orders communicated by various agents, once profitability is certain
the next step is of checking with the production department .Checking whether
the order can be furnished from stock available or could be produced within
time span available with the production department.

3) Pricing and confirmation of delivery- Price negotiations take place amongst

the exporting company and the agent and the final price is decided upon with
mutual agreement in both the parties. Now at this stage it’s very important that
exporter should communicate the delivery time he will take to deliver the
order to the agent and generally after some negotiations and keeping in view
the shipment time from exporters port to agents port the time period is fixed.
For example- the delivery time for South America varies from 35-90 days
depending upon the size of order and shipment time.

4) Formal Contract- At this stage after the price delivery time have been
finalized a formal contract is prepared as per the term and conditions agreed
upon and is between the exporting party and importing party. Multiple copies
of the contract are prepared and copies are exchanged between the parties and
a scanned copy is sent to the agent. Now the exporting company at this very
stage asks the importing party for getting their LC (Letter of Credit) made.

LC is a bank to bank payment tools which assures the exporter of the

payment for the goods being exported by him to a foreign party. The LC is
prepared by the bank stating about the credibility of the importer and assuring
if importer makes any default with the payments the foreign bank issuing the
LC on his behalf will make he payment.
5) Sampling, Quality approval and Production Planning Stage- The customer
or importer in order to be assure of the quality of goods being exported to him
asks the exporting company to send samples of the goods. As asked by the
customer the exporter sends the samples of the good to the agent and if there is
any doubt w.r.t. quality the client may ask for sample several times. Once the
agent gets the sample he shows it to the buying party and if satisfied the agent
gives an approval on behalf of the party to the corporate unit of exporter.

Next is production planning stage in which the exporter decides and

schedules from which unit to produce and send the order and in case of big
orders multiple locations needs to selected. The choice of the production unit
depends upon the work load on the various units, specific material ordered
might not be produced in other units the sample approved by the party might
have come from a specific unit and transportation cost etc. For Example-
CYPИ itself has 11 production units on multiple locations 3 in Madhya
Pradesh, 3 in Punjab and 5 in Baddi (Himachal Pradesh).

6) Receipt of LC and Payments- Majority of export payments come from Letter

of Credit though there are other methods of payment aswell but LC is
considered the safest of all and that’s why it is the most preferred accepted
method. For Example- CYPИ itself does 90% of it’s exports through LC only.
If LC is the mode of payment at this stage when LC is received the scanning
of LC takes place. Scanning of LC or re-reading of LC to make sure that all
the terms and conditions are the same as agreed earlier and if in any case there
is a disagreement the customer is asked to get it corrected and a new LC is got
prepared from the foreign bank by the customer. The LC generally is of 5-6
pages of length and can be of a duration of 30, 60, 90 or 120 days. The other
methods are explained as under:

 Cash-in-Advance/Advance: In this method the exporter despatches

the order when the whole payment has been received by him. With
cash-in-advance payment terms, the exporter can avoid credit risk
because payment is received before the ownership of the goods is
transferred. Wire transfers and credit cards are the most commonly
used cash-in-advance options available to exporters. However,
 requiring payment in advance is the least attractive option for the
buyer, because it creates cash-flow problems. Foreign buyers are also
concerned that the goods may not be sent if payment is made in
advance. Thus, exporters who insist on this payment method as their
sole manner of doing business may lose to competitors who offer more
attractive payment terms.

 Partial Advance: In this method 30% of the payment is received in

advance and the remaining 70% before unloading the goods at the
customers port. This method assures the exporter of the credibility &
intentions of the buyer as some advance needs to be deposited before
the consignment is despatched. One good thing about this method is
that the payment so received in advance can be used for financing the
working capital for the production and exportation process.

7) Contract registration with the Govt. – The government has imposed a lot of
restrictions on exports in the recent years and it has been made compulsory to
get every export consignment sent registered with the concerned Govt. office.
For this purpose all the proofs related to export order and it’s despatch needs
to be submitted with the designated Govt. office.

8) Pre-shipment preparation and activities stage- At this stage the CHA

(Clearing House Agent) of the exporter is provided with all the pre-shipment
documents by the corporate unit so as the CHA can get the registration of the
export done for the shipping bill with the concerned authorities/shipping
agent. Once the shipping bill has been prepared by the shipping agent the next
step is of getting the goods cleared from customs.

The documents required by the custom office are as follows:-

 Commercial invoice

 Packing list

 A.R.E. -1 Form

 Shipping bill
 As export proofs of the goods being shipped. Once on submission of
the required documents the export consignment gets registered for customs clearance.
For custom clearance of goods from Govt. of India a random examination of the
consignment generally takes place, in this any random carton/’s might be opened-up
and examined by the custom appointed examiner of goods. After the examiner is
satisfied the goods are cleared from custom.

9) Shipment of goods- In this step the final shipping of the goods takes place but
not before all the shipping expenses & agency charges have been paid by the
exporter of goods. Usually there is a separate department to look after the
shipment of goods within the corporate unit of a company. This department
looks after the following charges:-

 Payment to the CHA

 Shipping Line Charges

 Transporters charges

 Container charges

 Fees of inspection agencies

The department of shipment looks after all these charges and there payments.

10) Generation of Post-shipment documents- At this stage all the documents

sent to CHA at the time of pre-shipment of goods are returned by him duly
signed by the shipping line. These documents are stated below:-

 Shipping bill

 Mate receipt

 Bill of lading

 A.R.E.-1 Form in original

The documents sent to the customer for getting signed by him are as follows:-
  Commercial invoice copy

 Packing list

Once all the documents are in the exporters hand he approaches the bank with
these proofs and proof of despatch and asks for the clearance of the payment.

11) Commission payment to the Agent- Once the LC is cleared after despatch
and payment received it’s time for giving the agent (who brought the export
order and provided a link between buyer and seller during the whole
consignment) his well deserved share. Agents are usually paid on a quarterly
basis and have to produce the debit note while asking for his commission. The
commission varies from order to order but is somewhere between 2-5% per
export order in the textile industry.

BILL OF LADING: The Bill of lading is a document where in the shipping

company gives its official receipts of the goods shipped in its vessel and at the same
time contracts to carry them to the port of destination. A contract between the owner
of the goods and the carrie

A Bill of lading acknowledges receipt of the goods apparently in good order

and condition and without any qualification is termed as a clean bill of lading; if a Bill
of lading is qualified with certain adverse remarks such as 'goods insufficiency
packed in accordance with carriage of goods by Sea Act", "one box damaged" etc.,
 EXPORT PROCEDURE OF THE COMMERCIAL UNIT
STEP-1: RECEIPT OF DESPATCH ADVICE
• The process starts with the receipt of despatch advice by the commercial unit
from the corporate unit.
• The despatch advice so prepared is itself a collection of documents. It has
three main parts:
• Shipping instruction
• Commercial invoice
• Packing list

STEP-2: ARRANGEMENT OF TRUCK/CONTAINER

• Corporate unit then arranges for the container in which the goods to be
exported are loaded, and if in any case a transport vehicle is needed the
commercial unit arranges for the same.

STEP-3: PACKING LIST

• Then a packing list is prepared by the commercial unit with due regards to
despatch advice received from corporate earlier (which also includes a packing
list).

STEP-4: LOADING
• Then loading of goods to the containers or the truck which ever suitable takes
place all in accordance with the packing and marking list provided by
commercial which is done by the labour under tight supervision.
• At the time of loading photographs are taken -
• Empty container.
• At the time of loading.
• When loading is complete.
• With driver when loading is complete.
• At the time of seal.
• After completion of loading container is sealed. this seal is provided by
shipping line.
STEP-5: DOCUMENTATION
• If the goods are sent by means of a truck further documentation is required as
under:
• gate pass is prepared in quadruplicates.
• 5 copies of ARE form needs to be provided.

OR
• If in case container is used documentation with respect to the container are as
follows:
• 5 copies of ARE form.
• Examination report two copies.
• Annexure-A two copies.
• Label for sample packing -2 copies.
• Annexure-c and Annexure c-1 form which is sent by CHA to the commercial
unit.
• The photocopy of driver documents are taken for proof such as -
• Driver licence
• Certifiate of registration
• Insurance copy
• After taking a photocopy of GR (Bilty). Truck is despached.
• Form ARE-1 sent to Excise department.
• Pink copy
• Green copy

STEP-6: PROOF OF EXPORT

• ARE-1 endorsed by Custom Authority.
• White copy
• Yellow copy
• Shipping Bill
• Bill of lading
• Mate receipt
So there is a lot of documentation to be done in processing an export order and
all this documentation is for a reason and purpose and holds it’s own importance in
the process. So understanding of these documents so required becomes
COMMERCIAL INVOICE:

Commercial invoice is made up of two different words- commerce + invoice.

Commerce- Meaning

Commerce is division of trade or production which deals with the exchange of

goods & services from producer to final consumer OR commerce is the exchange of
goods & services from the producer to the consumer. It comprises the trading of
something of economic value such as goods, services, information, or money between
two or more entities. Commerce functions as the central mechanism which drives
capitalism and certain other economic systems. Commerce involves trade & aids to
trade which help in the exchange of goods & services.

Invoice- meaning

A statement given by the seller to the buyer itemizing a sale & demanding
pavement. An invoice may be for sale of a good and service. The invoice usually
states the name of the counterparties & the goods and/or services purchased, and adds
any applicable sales tax or VAT. It may also include the term of sale, especially if it is
a credit sale. An invoice is also called a bill or a bill due.

So a commercial invoice is nothing but a “bill for merchandise sold”.

Commercial invoice- definition

A bill for the goods from the seller to the buyer. These invoices are often used
by governments to determine a true value of goods when assessing customs duties.
Government specifies its form, content, number of copies, language to be used, &
other characteristics. The commercial invoice will normally be presented on the
exporter's letterhead & will be addressed to the importer. It should contain full details
of the consignment, including price & other related costs, in order to facilitate
customs clearance. It must be signed and dated. Freight & insurance, when included
in the selling price, should be itemised separately as these charges are not subject to
duty in certain countries. Document required by customs to determine true value of
imported goods, for assessment of duties & taxes. A commercial invoice
(in addition to other information), must identify the buyer & seller, and
clearly indicate the

(1) date and terms of sale

(2) quantity, weight and/or volume of the shipment

(3) type of packaging

(4) complete description of goods

(5) unit value and total value

(6)insurance, shipping and other charges (as applicable).

From the proforma to the commercial invoice

Although the proforma invoice comes before the commercial invoice, the
proforma invoice really only serves as a means of negotiating the actual contract. We
said previously that the proforma invoice is the 'offer' put to the importer by exporter.
The importer may accept the terms specified in the proforma invoice, but a more
likely scenario is that the importer will negotiate some of these terms with the
exporter. There may be some backward & forward communication between the
exporter & importer before the importer finally agrees to the transaction. Once the
importer indicates that (s)he is happy with the terms of the contract as outlined in the
(final) proforma invoice, the exporter will then be requested to provide the importer
with a commercial invoice. The commercial invoice should reflect the final (agreed-
upon) profroma invoice exactly - any deviances will result in problems executing the
transaction or receiving payment.

Based on the terms specified in this commercial invoice, the importer will
instruct his/her bank (referred to as the issuing bank) to issue a letter of credit. This
letter of credit (or the documentation associated with any other form of payment) will
also need to reflect the terms specified in the commercial invoice exactly, while all
subsequent documentation must reflect the terms of the L/C; there can be no
exceptions. From this explanation, it is clear that the commercial invoice plays a
central role in an export transaction.

A proforma invoice is much a same as a commercial invoice which, when used

in international trade, represents the details of an international sale to customs
authorities. A pro forma invoice is presented in the place of a commercial
invoice when there is no sale between the sender & the importer, or if the terms of the
sale between the seller & the buyer are such that a commercial invoice is not yet
available at the time of the international shipment. A pro forma invoice is required to
state the same facts that the commercial invoice would and the content is prescribed
by the governments who are a party to the transaction. After the pro-forma invoice is
accepted, the exporter must prepare a commercial invoice. The commercial invoice is
required by both the exporter (to obtain the necessary export documents to enable the
consignment to be exported, to prove ownership and to enable payment) and importer
(who requires the commercial invoice to facilitate the import of the goods in
question). In exporting, the commercial invoice is considered a very important
document as it serves as the starting document that underpins an export transaction.
Content of a commercial invoice

An invoice is the seller's bill for merchandise and contains particulars of goods, such
as the price per unit at a particular location, quantity, total value, packing
specifications, terms of sale, identification marks of the package , bill of lading
number, name and address of the importer, destination, name of the ship etc.

1. International air waybill number.

2. Date of exportation.

3. Export references (order numbers, invoice numbers, etc.)

4. Complete name and address of shipper.

5. Complete name and address for the consignee.

6. Country of export.

7. Complete name and address of importer, if different from the consignee.

8. Country of manufacture of the product.

9. Country of ultimate destination.

10. Detailed description of merchandise should include (but not limited to) the
following information:

a. Any identifying marks or numbers used on the packaging.

b. Total number of packages described on each line.

c. Type of packaging being used: i.e., roll, tube, carton, etc.

d. Complete details of the item(s) being shipped, including name, part

numbers, serial numbers and H.S. numbers, if available.

e. Quantity of items described on each line.

f. Measurement unit used-lbs., kg, pieces, sets, pairs, yards etc.

 g. Weight of items described on each line.

h. Dollar value of each unit.

i. Dollar value of items described on each line.

j. Dollar value of all items listed on the invoice.

k. Check the appropriate box, F.O.B (Free On Board), C & F (Cost and
Freight), C.I.F. (Cost, Insurance and Freight).

11. Shipper's Declaration, signature and date.

12. One original and two copies required for FedEx shipments.
 COMMERCIAL INVOICE

Exporter Invoice No. & Date Exporter’s Ref. No.

Buyer’s Order No. & Date

Other Reference

Consignee Buyer (if other than consignee)

Country or Origin of Goods Country of Final Destination

INDIA

Pre Carriage by Place of Receipt by Pre Carrier Terms of Delivery & Payment

Vessel/Flight No. Port of Loading

Port of Discharge Final Designation

Marks & Nos. No. of Kind of Pkgs. Description of Goods Quantity Rate Amount

TOTAL

AMOUNT CHARGEABLE

FOR VENUS INDUSTRIAL CORPORATION

AUTH. SIGN.

PACKING AND LABELING OF THE GOODS

PACKING LIST
 Considerably more detailed & informative than a standard domestic packing
list, it lists seller, buyer, shipper, invoice number, date of shipment, mode of transport,
carrier, & itemizes quantity, description, the type of package, such as a box, crate,
drum, or carton, the quantity of packages, total net & gross weight (in kilograms),
package marks, and dimensions, if appropriate. Both commercial stationers & freight
forwarders carry packing list forms. A packing list may serve as conforming
document. It is not a substitute for a commercial invoice.

PURPOSE OF PACKAGING

An important stage after manufacturing of goods or their procurement is their

preparation for shipment which involves packaging & labelling of goods to be
exported. Proper packaging & labeling not only makes the final product look
attractive but also save a huge amount of money by saving the product from wrong
handling the export process.

PACKAGING

The primary role of packaging is to contain, protect and preserve a product as

well as aid in its handling and final presentation. Packaging also refers to the process
of design, evaluation, & production of packages. The packaging can be done within
the export company or the job can be assigned to an outside packaging company.
Packaging provides following benefits to goods to be exported:

 Physical Protection – Packaging provides protection against shock, vibration,

temperature, moisture & dust.

 Containment or agglomeration – Packaging provides agglomeration of small

objects into one package for reason of efficiency & cost factor. For example it
is better to put 1000 pencils in one box rather than putting each pencil in
separate 1000 boxes.

 Marketing: Proper & attractive packaging play an important role in

encouraging a potential buyer.

 Convenience - Packages can have features which add convenience in

distribution, handling, display, sale, opening, use, & reuse.
 Security - Packaging can play an important role in reducing the security risks
of shipment. It also provides authentication seals to indicate that the package
& contents are not counterfeit. Packages also can include anti-theft devices,
such as dye-packs, RFID tags, or electronic article surveillance tags, that can
be activated or detected by devices at exit points and require specialized tools
to deactivate. Using packaging in this way is a means of loss prevention.

PACKING NOTE AND LIST: The difference between the two….

The difference between packing note & a packing list is that the packing note
refers to a particular of the contents of an individual pack, while the packing list is a
consolidated statement of the contents of a number of cases or packs. A packing note
should include the packing note number, the date of packing, the name and address of
the exporter, the name and address of the importer, order number, date, shipment per
bi, bill of lading number and date, marking numbers, case number to which the note
relates, and the contents of the goods is in terms of quantity and weight. Apart from
the details in the packing note, the packing list should also include item wise details.

Labeling- label for sample packing

Like packaging, labeling should also be done with extra care. It is also important for
an exporter to be familiar with all kinds of sign and symbols and should also maintain
all the nationally and internationally standers while using these symbols. Labeling
should be in English, & words indicating country of origin should be as large and as
prominent as any other English wording on the package or label.

Labeling on product provides the following important information:

 Shipper's mark

 Country of origin

 Weight marking (in pounds and in kilograms)

 Number of packages and size of cases (in inches and centimeters)

 Handling marks (international pictorial symbols)

 Cautionary markings, such as "This Side Up."

 Port of entry

 Labels for hazardous materials

Labeling of a product also provides information like how to use, transport,

recycle, or dispose of the package or product.

It is better to choose a fast dyes for labeling purpose. Only fast dyes should be
used for labeling. Essential data should be in black and subsidiary data in a less
conspicuous colour; red and orange and so on. For food packed in sacks, only
harmless dyes should be employed, and the dye should not come through the packing
in such a way as to affect the goods.

Content of a packing list

When you prepare your goods for shipment, you will be required to prepare a
detailed export packing list. This is a formal document that itemises quite a number of
details about the cargo such as:

 Your name and contact details

 The importer's/consignee's/buyer's name, address and contact details

 The gross, tare and net weights of the cargo

 The nature, quality and specifications of the product being shipped

 The type of package (such as pallet, box, crate, drum, carton, etc.)

 The measurements/dimensions of each package

 The number of pallets/boxes/crates/drums, etc.

 The contents of each pallet or box (or other container)

 The package markings, if any, as well as shipper's and buyer's reference

numbers

It is also important that the details on the packing list (such as

shipper's/importer's details, number of items involved, etc.), match what is stipulated
on the commercial invoice and bill of lading/airway bill. You can imagine that if there
is a mismatch between the packing list & the other transport/export documents that
may lead to closer scrutiny of the cargo & may ultimately result in delays in the cargo
arriving at its destination. (Note that pricing information is not required on the
packing list.)

The packing list should be attached to the outside of a package in a waterproof

envelope or plastic sheath marked "Packing list enclosed". The list is used by the
shipper or forwarding agent to determine (1) the total shipment weight and volume &
(2) whether the correct cargo is being shipped. In addition, customs officials (both
local and foreign) may use the list to check the cargo. Packing lists come in fairly
standard forms & can be obtained from freight forwarder.

that the packing list agree exactly with all the terms & conditions of the export sale. It is
important for you to realise that any mistake on packing list may cause a delay in
clearance at the port of destination. Customs Authorities in a target country have the
right to delay the clearance of the shipment until the importer provides packing list
reflecting the real contents of the container (should your packing list be incomplete or
incorrect). If all the information required for the packing list is already stated in the
commercial invoice, then the packing list may be unnecessary.

.
IMPORT PROCEDURE

CYPИ
 IMPORT PROCEDURE AT VARDHAMAN

Now when we are through with the whole export procedure it is quite easy to
understand the import procedure as it is nothing just the inverse of export happening
in this case. Most of the documentation being done by the Vendor or exporter in this
case. The import procedure is as follows:

 The very first thing is to select vendor from whom you choose to import the
goods. The process of vendor selection is very easy as it is the same for
domestic order as well. The company discloses the quantity, quality of goods
to be imported & the time at which the goods are needed, quotations are
invited from various vendors. The vendor who offers most competent rate and
satisfies all other conditions of the importing company gets the order. The
order is placed with a selected vendor. Sometimes importers have certain fixed
vendor or are in legal agreement/bond with the certain vendor in such cases
order is directly placed with these vendors.

 Then the next step is of negotiation of price & terms & condition of import
with the vendor selected in case quotations have not been invited or there is
any variation in the conditions communicated by importer and agreed upon by
vendor.

 Next step is of opening up of a LC with a bank by the importer. LC stands for

letter of credit which assures the vendor about the credibility of the importer
and is indeed an assurance from the side of the bank that if importer doesn’t
makes the payment, bank will do it on behalf of him. For issuing an LC bank
charges certain charges from the importer.

 After receiving of the Bank LC by the vendor, the vendor despatches the goods
by furnishing all documents & doing away with all the formalities required by
his countries export department. As we have already stated the hole export
procedure earlier in the project it is easy to understand how the vendor gets
the consignment moving from his port.

 When the goods reach the importer they are accompanied by a bill of
entry/shipping bill/despatch advice which is to be signed by importer on
 receipt of the good and is sent back to vendor as a proof of safe receipt of
goods.

DOCUMENTS REQUIRED IN THE IMPORT PROCEDURE:

Letters of Credit

Letters of credit (LCs) are one of the most secure instruments available to
international traders. An LC is a commitment by a bank on behalf of the buyer that
payment will be made to the exporter, provided that the terms and conditions stated in
the LC have been met, as verified through the presentation of all required documents.
The buyer pays his or her bank to render this service. An LC is useful when reliable
credit information about a foreign buyer is difficult to obtain, but the exporter is
satisfied with the creditworthiness of the buyer’s foreign bank. An LC also protects
the buyer because no payment obligation arises until the goods have been shipped or
delivered as promised.

A letter of credit is a document typically issued by a bank or financial

institution, which authorizes the recipient of the letter (the "customer" of the bank) to
draw amounts of money up to a specified total, consistent with any terms and
conditions set forth in the letter. This usually occurs where a bank's customer seeks to
assure a seller (the "beneficiary") that it will receive payment for any goods it sells to
customer.

For example, the bank might extend a letter of credit conditioned upon the
beneficiary's providing documentation that the goods purchased with the line of credit
have been shipped to the customer. The customer may use the letter of credit to assure
the beneficiary that, if it satisfies the conditions set forth in the letter, it will be paid
for any goods it sells & ships to the customer.

In simple terms, a letter of credit could be said to document a bank customer's

line of credit, & any terms associated with its use of that line of credit. Letters of
credit are most commonly used in association with long-distance & international
commercial transactions.

Elements of a Letter of Credit

 A payment undertaking given by a bank (issuing bank)

 On behalf of a buyer (applicant)

 To pay a seller (beneficiary) for a given amount of money

 On presentation of specified documents representing the supply of goods

 Within specified time limits

 Documents must conform to terms and conditions set out in the letter of credit

 Documents to be presented at a specified place

PARTIES ASSOCIATED WITH THE LETTER OF CREDIT

1. Applicant

The applicant is a party who requests and instructs the issuing bank to open a
letter of credit in favor of the beneficiary. The applicant usually is the importer or
buyer of goods and/or services. The applicant can also be another party acting on
behalf of importer, such as a confirming house. The confirming house is equivalent to
a buying office, acts as an intermediary between importer and exporter, and it can be
located in a third country or in the exporter’s country. The confirming house
negotiates and books the order on behalf of the importer & guarantees payment to the
exporter, and often finances the importer. When dealing with importers in the country
with a foreign shortage, for example Nigeria, a exporter may deal with the confirming
house in the United Kingdom or in other areas to ensure payment.

2. Beneficiary

The beneficiary is entitled to payment as long as he can provide a

documentary evidence required by the letter of credit. The letter of credit is a distinct
& separate transaction from the contract on which it is based. All parties deal in
documents & not in goods

The issuing bank is not liable for performance of the underlying contract between the
customer & beneficiary. The issuing bank's obligation to the buyer, is to examine all
documents to insure that they meet all the terms and conditions of the credit. Upon
requesting demand for payment a beneficiary warrants that all conditions of the
agreement have been complied with. If the beneficiary (seller) conforms to letter of
credit, the seller must be paid by the bank.

3. Issuing Bank
 The issuing bank's liability to pay & to be reimbursed from its customer
becomes absolute upon the completion of the terms and conditions of the letter of
credit. Under the provisions of the Uniform Customs and Practice for Documentary
Credits, the bank is given a reasonable amount of time after receipt of the documents
to honor the draft.

The issuing banks' role is to provide a guarantee to the seller that if compliant
documents are presented, the bank will pay the seller the amount due and to examine
the documents, and only pay if these documents comply with the terms & conditions
set out in the letter of credit.

Typically the documents requested will include a commercial invoice, a

transport document such as a bill of lading or airway bill & an insurance document;
but there are many others. Letters of credit deal in documents, not goods.

4. Advising Bank

An advising bank, usually a foreign correspondent bank of the issuing bank

will advise the beneficiary. Generally, the beneficiary would want to use a local bank
to insure that the letter of credit is valid. In addition, the advising bank would
responsible for sending the documents to the issuing bank. The advising bank has no
other obligation under letter of credit. If the issuing bank does not pay the beneficiary,
the advising bank is not obligated to pay.

5. Confirming Bank

The correspondent bank may confirm the letter of credit for the beneficiary. At
the request of the issuing bank, the correspondent obligates itself to insure payment
under the letter of credit. The confirming bank would not confirm the credit until it
evaluated the country and bank where letter of credit originates. The confirming bank
is usually advising bank.

6. Negotiating Bank

The bank which negotiates the draft or documents presented by the beneficiary
or bonafide holder is known as negotiating bank. When a bank negotiates the draft
and documents i.e. the negotiation it gives value to such draft and documents, not just
examination of the documents.
Bank Charges

Bank charges are the charges paid by the importer to the bank which opens the
importers LC a/c and issues an LC to facilitate import.
 LIMITATIONS OF THE PROJECT

The key limitations of the project are as under:

 The custom duty and laws related to export-import are vibrantly changing so
the research works life is a factor of governmental policies.

 Though maximum efforts would be initiated to make the study as much

practical as it can be but the topic so chosen is of theoretical in nature.

 A lot of secondary data has been used in the project in concern to the
government export promotion schemes, role of various government
departments in export-import procedures and documentation required for
custom clearance etc. though due care has been taken of the reliability of the
data but certain mistakes stand unavoidable and should be treated as part of
the learning process.

 The primary data so obtained by personal enquiry method or face to face

interaction with the people dealing with the relative process is subject to the
personal bias of the respondents and the reality might be far off from their
presumption but trust is the basis of the project. All efforts have been made to
cross verify the data so obtained at every level of the project but in the end
everything shoulders upon the correctness and understanding of the
respondents and I assume that no human is perfect and such is the case with
the project aswell and there is always a scope for improvement.
 SUGGESTIONS & RECOMMENDATIONS
(CONCLUSION)

 To gain a competitive edge the company should appoint a department to

interlink the activities of both the units commercial and corporate and
coordinate to fasten up the custom documentation process.

 The documentation is the most time consuming process and if we act smart at
it we can process goods faster than the competitors. So I suggest a small
department in which each export order is a separate project with certain
allocated individuals dealing with it to get documents processed at the earliest
possible time by coordinating with corporate and commercial. This lead time
saved could be passed on to customer by processing order faster i.e. than
competitors & building a competitive edge.

 As the hand knitting yarn trend is declining due to modernization therefore it

should be introduced as a subject in the schools.

 Advertisement is encouraged so that people get aware about the various

benefits of hand knitting yarn.

Advertisements are made to avoid the duplicacy of the products by introducing

hologram so that customers are aware of the product
 CONCLUSION

The summer training has given me the opportunity to learn about the corporate world.
It has surely made a perfect balance between the theoretical and practical aspect of
this course. It gave me an opportunity to work in the INTERNATIONAL sector
which was not explored much in the theories.
The job that was given to me the “to conduct a market research on the growth
opportunity of the Indian Fabrics”, which was successfully completed during the
tenure of my summer training.

This project also helped me to work for achieving the targets. This target which was
given to me during the summer training was achieved the period during my summer
training.
 BIBLIOGRAPHY

WEBSITES:

 http://retailindustry.about.com/library/uc/03/uc_dutta4.htm

 http://www.hinckley-online.co.uk/hosiery.shtml

 http://www.tribuneindia.com/2002/20020303/ldh1.htm

 http://textilescommittee.nic.in/Pro-Kol.pdf

 http://textilescommittee.nic.in/Pro-Kol.pdf

 http://www.knitwearclub.com/scripts/achive.asp

BOOKS:

 Malhotra. K. Naresh Marketing Research Pearson Education-4th Edition,2005